AURORA, ON, May 5, 2016 /CNW/ - Magna International Inc.
(TSX: MG; NYSE: MGA) today reported financial results for the
first quarter ended March 31, 2016.
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THREE MONTHS
ENDED
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March 31,
2016
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March 31,
2015
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Sales
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$
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8,900
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$
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7,772
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Adjusted
EBIT(1)
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$
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698
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$
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631
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Income from
continuing operations before
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income
taxes
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$
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675
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$
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621
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Net income from
continuing operations
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attributable to Magna
International Inc.
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$
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492
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$
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455
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Diluted earnings per
share
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from continuing
operations
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$
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1.22
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$
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1.10
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All results are
reported in millions of U.S. dollars, except per share figures,
which are in U.S. dollars.
(1)
Adjusted EBIT is the measure of segment profit or loss as reported
in the Company's attached unaudited interim consolidated financial
statements.
Adjusted EBIT
represents income from operations before income taxes; interest
expense, net; and other (income) expense, net.
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Commenting on the completion of the Getrag acquisition early in
2016, Don Walker, Magna's Chief
Executive Officer stated: "We welcome all Getrag employees to the
Magna family of companies. The combined capabilities of Magna
Powertrain and Getrag better position us to capitalize on
powertrain opportunities and future changes in the global
automotive industry."
THREE MONTHS ENDED MARCH 31,
2016
We posted sales of $8.90 billion
for the first quarter ended March 31,
2016, an increase of $1.13
billion or 15% from the first quarter of 2015.
Excluding the impact of foreign currency translation, our sales
increased 19% in the first quarter of 2016, compared to the first
quarter of 2015. North American and European light vehicle
production increased 10% and 7%, respectively, in the first quarter
of 2016 compared to the first quarter of 2015.
Our complete vehicle assembly sales decreased 1% in the first
quarter of 2016, compared to the first quarter of 2015, while our
complete vehicle assembly volumes decreased 15% from the comparable
quarter to approximately 23,000 units.
During the first quarter of 2016, income from continuing
operations before income taxes was $675
million and net income from continuing operations
attributable to Magna International Inc. was $492 million, increases of 9% and 8%
respectively, both compared to the first quarter of 2015.
Diluted earnings per share from continuing operations increased 11%
in the first quarter of 2016, which includes the favourable impact
of a reduced share count.
During the first quarter ended March 31,
2016, we generated cash from operations of $767 million before changes in operating assets
and liabilities, and invested $469
million in operating assets and liabilities. Total
investment activities for the first quarter of 2016 were
$2.18 billion, including $1.78 billion in business combinations,
$346 million in fixed asset additions and $54 million in investments and other assets.
A more detailed discussion of our consolidated financial results
for the first quarter ended March 31,
2016 is contained in the Management's Discussion and
Analysis of Results of Operations and Financial Position and the
unaudited interim consolidated financial statements and notes
thereto, which are attached to this Press Release.
RETURN OF CAPITAL TO SHAREHOLDERS
During the first quarter of 2016, Magna repurchased 7.3 million
shares for $300 million pursuant to
our Normal Course Issuer Bid ("NCIB") which expires in November
2016. We have 30.1 million shares remaining and available for
purchase under the NCIB.
Yesterday, our Board of Directors declared a quarterly dividend
of $0.25 with respect to our
outstanding Common Shares for the quarter ended March 31, 2016. This dividend is payable on
June 10, 2016 to shareholders of
record on May 27, 2016.
OTHER MATTERS
On May 2, 2016, Magna increased
its revolving credit facility by $500
million to $2.75 billion and extended the final maturity
date from June 22, 2020 to
June 22, 2021.
Vince Galifi, Magna's Chief
Financial Officer commented: "As a result of our continued
growth, we believe it is prudent to both increase the amount and
extend the term on our credit facility. This provides
flexibility to allow us to capitalize on future
opportunities."
UPDATED 2016 OUTLOOK
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Light Vehicle
Production (Units)
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North
America
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18.0
million
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Europe
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21.3
million
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Production
Sales
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North
America
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$19.5 billion - $20.1
billion
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Europe
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$8.8 billion - $9.2
billion
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Asia
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$2.1 billion - $2.3
billion
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Rest of
World
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$0.3 billion - $0.4
billion
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Total Production
Sales
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$30.7 billion - $32.0
billion
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Complete Vehicle
Assembly Sales
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$1.9 billion - $2.2
billion
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Total
Sales
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$35.5 billion - $37.2
billion
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EBIT
Margin(1)
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High 7%
range
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Interest Expense,
net
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Approximately $90
million
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Tax
Rate(1)
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25% - 26%
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Capital
Spending
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$1.8 billion - $2.0
billion
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(1)
Excluding other expense, net
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In this 2016 outlook, in addition to 2016 light vehicle
production, we have assumed no material acquisitions or
divestitures. In addition, we have assumed that foreign exchange
rates for the most common currencies in which we conduct business
relative to our U.S. dollar reporting currency will approximate
current rates.
ABOUT MAGNA
We are a leading global automotive supplier with 306
manufacturing operations and 92 product development, engineering
and sales centres in 29 countries. We have over 147,000 employees
focused on delivering superior value to our customers through
innovative products and processes, and World Class Manufacturing.
These figures include manufacturing operations, product
development, engineering and sales centres and employees in
equity-accounted operations. Our product capabilities include
producing body, chassis, exterior, seating, powertrain, electronic,
vision, closure and roof systems and modules, as well as complete
vehicle engineering and contract manufacturing. Our common
shares trade on the Toronto Stock Exchange (MG) and the New York
Stock Exchange (MGA). For further information about Magna, visit
our website at www.magna.com.
We will hold a conference call for interested analysts and
shareholders to discuss our first quarter results on Thursday, May 5, 2016 at 2:30 p.m. EDT. The conference call will be
chaired by Don Walker, Chief
Executive Officer. The number to use for this call is
1-888-612-1048. The number for overseas callers is 1-416-981-9080.
Please call in at least 10 minutes prior to the call. We will also
webcast the conference call at www.magna.com. The
slide presentation accompanying the conference call will be
available on our website Thursday afternoon prior to the
call.
FORWARD‑LOOKING STATEMENTS
This press release contains statements that constitute
"forward-looking statements" or "forward-looking information"
within the meaning of applicable securities legislation, including,
but not limited to, statements relating to: Magna's forecasts of
light vehicle production in North
America and Europe;
expected consolidated sales, based on such light vehicle production
volumes; production sales, including expected split by segment, in
its North America, Europe, Asia
and Rest of World segments for 2016; complete vehicle assembly
sales; consolidated EBIT margin, net interest expense; effective
income tax rate; fixed asset expenditures; our ability to
capitalize on powertrain opportunities and future changes in the
global automotive industry as a result of our acquisition of
Getrag; and future returns of capital to our shareholders,
including through dividends or share repurchases. The
forward-looking information in this document is presented for the
purpose of providing information about management's current
expectations and plans and such information may not be appropriate
for other purposes. Forward-looking statements may include
financial and other projections, as well as statements regarding
our future plans, objectives or economic performance, or the
assumptions underlying any of the foregoing, and other statements
that are not recitations of historical fact. We use words such as
"may", "would", "could", "should", "will", "likely", "expect",
"anticipate", "believe", "intend", "plan", "forecast", "outlook",
"project", "estimate" and similar expressions suggesting future
outcomes or events to identify forward-looking statements. Any such
forward-looking statements are based on information currently
available to us, and are based on assumptions and analyses made by
us in light of our experience and our perception of historical
trends, current conditions and expected future developments, as
well as other factors we believe are appropriate in the
circumstances. However, whether actual results and developments
will conform with our expectations and predictions is subject to a
number of risks, assumptions and uncertainties, many of which are
beyond our control, and the effects of which can be difficult to
predict, including, without limitation: the potential for a
deterioration of economic conditions or an extended period of
economic uncertainty; declines in consumer confidence and the
impact on production volume levels; fluctuations in relative
currency values; continuing global or regional economic
uncertainty; restructuring, downsizing and/or other significant
non-recurring costs; underperformance of one or more of our
operating divisions; ongoing pricing pressures, including our
ability to offset price concessions demanded by our customers; our
ability to successfully launch material new or takeover business;
our ability to successfully identify, complete and integrate
acquisitions or achieve anticipated synergies; our ability to
conduct appropriate due diligence on acquisition targets; an
increase in our risk profile as a result of completed
acquisitions; shifts in market share away from our top customers;
shifts in market shares among vehicles or vehicle segments, or
shifts away from vehicles on which we have significant content;
inability to sustain or grow our business; risks of conducting
business in foreign markets, including China, India,
Eastern Europe, Brazil and other non-traditional markets for
us; a prolonged disruption in the supply of components to us from
our suppliers; work stoppages and labour relations disputes;
scheduled shutdowns of our customers' production facilities
(typically in the third and fourth quarters of each calendar year);
our ability to successfully compete with other automotive
suppliers; a reduction in outsourcing by our customers or the loss
of a material production or assembly program; the termination or
non-renewal by our customers of any material production purchase
order; our ability to consistently develop innovative products or
processes; exposure to, and ability to offset, volatile commodities
prices; warranty and recall costs; restructuring actions by OEMs,
including plant closures; shutdown of our or our customers' or
sub-suppliers' production facilities due to a labour disruption;
risk of production disruptions due to natural disasters or
catastrophic event; the security and reliability of our information
technology systems; pension liabilities; legal claims and/or
regulatory actions against us; changes in our mix of earnings
between jurisdictions with lower tax rates and those with higher
tax rates, as well as our ability to fully benefit tax losses;
impairment charges related to goodwill, long-lived assets and
deferred tax assets; other potential tax exposures; changes in
credit ratings assigned to us; changes in laws and governmental
regulations; costs associated with compliance with environmental
laws and regulations; liquidity risks; inability to achieve future
investment returns that equal or exceed past returns; the
unpredictability of, and fluctuation in, the trading price of our
Common Shares; and other factors set out in our Annual Information
Form filed with securities commissions in Canada and our annual report on Form 40-F
filed with the United States Securities and Exchange Commission,
and subsequent filings. In evaluating forward-looking statements,
we caution readers not to place undue reliance on any
forward-looking statements and readers should specifically consider
the various factors which could cause actual events or results to
differ materially from those indicated by such forward-looking
statements. Unless otherwise required by applicable securities
laws, we do not intend, nor do we undertake any obligation, to
update or revise any forward-looking statements to reflect
subsequent information, events, results or circumstances or
otherwise.
For further information about Magna, please see our website
at www.magna.com. Copies of financial data and other
publicly filed documents are available through the internet on the
Canadian Securities Administrators' System for Electronic Document
Analysis and Retrieval (SEDAR) which can be accessed at
www.sedar.com and on the United States Securities and
Exchange Commission's Electronic Data Gathering, Analysis and
Retrieval System (EDGAR) which can be accessed at
www.sec.gov
MAGNA INTERNATIONAL INC.
Management's Discussion and Analysis of Results of Operations and
Financial Position
Unless otherwise noted, all amounts in this Management's
Discussion and Analysis of Results of Operations and Financial
Position ("MD&A") are in U.S. dollars and all tabular amounts
are in millions of U.S. dollars, except per share figures, which
are in U.S. dollars. When we use the terms "we", "us", "our" or
"Magna", we are referring to Magna International Inc. and its
subsidiaries and jointly controlled entities, unless the context
otherwise requires.
In 2015, we sold substantially all of our interiors operations
(excluding our seating operations). The assets and liabilities, and
operating results for the previously reported interiors operations
are presented as discontinued operations and have therefore been
excluded from both continuing operations and segment results for
all periods presented in the attached financial statements. This
Management's Discussion and Analysis reflects the results of
continuing operations, unless otherwise noted.
This MD&A should be read in conjunction with the unaudited
interim consolidated financial statements for the three months
ended March 31, 2016 included in this press release, and the
audited consolidated financial statements and MD&A for the year
ended December 31, 2015 included in our 2015 Annual
Report to Shareholders.
This MD&A has been prepared as at May
4, 2016.
OVERVIEW
Our Business
We are a leading global automotive supplier with 306
manufacturing operations and 92 product development, engineering
and sales centres in 29 countries. We have over 147,000
employees focused on delivering superior value to our customers
through innovative products and processes, and World Class
Manufacturing. These figures include manufacturing operations,
product development, engineering and sales centres and employees in
equity-accounted operations. Our product capabilities include
producing body, chassis, exterior, seating, powertrain, electronic,
vision, closure and roof systems and modules, as well as complete
vehicle engineering and contract manufacturing. Our common
shares trade on the Toronto Stock Exchange (MG) and the New York
Stock Exchange (MGA). For further information about Magna, visit
our website at www.magna.com.
Industry Trends and Risks
Our operating results are primarily dependent upon the levels of
North American and European car and light truck production by our
customers and the relative amount of content we have on various
programs. Original equipment manufacturers ("OEMs") production
volumes in different regions may be impacted by factors which may
vary from one region to the next, including but not limited to:
general economic and political conditions; consumer confidence
levels; interest rates; credit availability; energy and fuel
prices; relative currency values; commodities prices; international
conflicts; labour relations issues; regulatory requirements; trade
agreements; infrastructure; legislative changes; and environmental
emissions and safety standards. These factors together with other
factors affecting our performance such as: operational
inefficiencies; costs incurred to launch new or takeover business;
price reduction pressures from our customers; warranty and recall
costs; commodities and scrap prices; restructuring, downsizing and
other significant non-recurring costs; and the financial condition
of our supply base, are discussed in our Annual Information Form
and Annual Report on Form 40-F, each in respect of the year ended
December 31, 2015, and remain
substantially unchanged in respect of the first quarter ended
March 31, 2016, except to the extent
that we are subject to higher warranty risks in the future as a
result of the completion of the Getrag acquisition in the first
quarter of 2016.
HIGHLIGHTS
- Light vehicle production remained strong in our two largest
markets. North American and European light vehicle production
increased 10% and 7%, respectively, compared to the first quarter
of 2015;
- Our sales increased 15% to $8.90
billion, compared to $7.77
billion in the first quarter of 2015;
- Adjusted EBIT(1) increased 11% to $698 million;
- Diluted earnings per share from continuing operations rose 11%
to $1.22, compared to $1.10 in the first quarter of 2015;
- We generated cash flow from operations of $298 million;
- We completed the acquisition of the Getrag Group of Companies
("Getrag"), one of the world's leading independent suppliers of
automotive transmissions, and a leader in the market for
dual-clutch transmissions ("DCTs"), a product which is expected to
experience high growth over the next decade;
- We returned $300 million to
shareholders in the form of share repurchases; and
- We returned $95 million to
shareholders in the form of dividends including a $0.03 increase in cash dividends paid per Common
Share to $0.25.
1
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We believe Adjusted
EBIT is the most appropriate measure of operational profitability
or loss for our reporting segments. Adjusted EBIT represents income
from operations before income taxes; interest expense, net; and
other expense, net.
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RESULTS OF OPERATIONS
Average Foreign Exchange
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For the three
months
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ended March
31,
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2016
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2015
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Change
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1 Canadian dollar
equals U.S. dollars
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0.728
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0.808
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- 10%
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1 euro equals U.S.
dollars
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1.103
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1.129
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- 2%
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1 British pound
equals U.S. dollars
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1.431
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1.517
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- 6%
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1 Chinese renminbi
equals U.S. dollars
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0.153
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0.160
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- 4%
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1 Brazilian real
equals U.S. dollars
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0.256
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0.351
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- 27%
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The preceding table reflects the average foreign exchange rates
between the most common currencies in which we conduct business and
our U.S. dollar reporting currency. The changes in these foreign
exchange rates for the three months ended March 31, 2016 impacted the reported U.S. dollar
amounts of our sales, expenses and income.
The results of operations whose functional currency is not the
U.S. dollar are translated into U.S. dollars using the average
exchange rates in the table above for the relevant period.
Throughout this MD&A, reference is made to the impact of
translation of foreign operations on reported U.S. dollar amounts
where relevant.
Our results can also be affected by the impact of movements in
exchange rates on foreign currency transactions (such as raw
material purchases or sales denominated in foreign currencies).
However, as a result of hedging programs employed by us, foreign
currency transactions in the current period have not been fully
impacted by movements in exchange rates. We record foreign currency
transactions at the hedged rate where applicable.
Finally, foreign exchange gains and losses on revaluation and/or
settlement of monetary items denominated in a currency other than
an operation's functional currency impact reported results. These
gains and losses are recorded in selling, general and
administrative expense.
RESULTS OF OPERATIONS – FOR THE THREE MONTHS ENDED
MARCH 31, 2016
Sales
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For the three
months
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ended March
31,
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2016
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2015
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Change
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Vehicle Production Volumes(millions
of units)
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North
America
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4.511
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4.106
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+
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10%
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Europe
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5.613
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5.226
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+
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7%
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Sales
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External
Production
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North
America
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$
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4,764
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$
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4,225
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+
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13%
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Europe
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2,266
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1,895
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+
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20%
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Asia
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507
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403
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+
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26%
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Rest of
World
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80
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131
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-
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39%
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Complete Vehicle
Assembly
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596
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600
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-
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1%
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Tooling, Engineering
and Other
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687
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518
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+
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33%
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Total
Sales
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$
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8,900
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$
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7,772
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+
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15%
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External Production Sales - North
America
Reported external production sales in North America increased 13% or $539 million to $4.76
billion for the first quarter of 2016 compared to
$4.23 billion for the first quarter
of 2015, primarily as a result of:
- the launch of new programs during or subsequent to the first
quarter of 2015, including the:
- Ford Edge and Lincoln MKX;
- Ford F-150 pickups; and
- Chevrolet Malibu.
- higher production volumes on certain existing programs;
and
- the acquisition of Getrag during the first quarter of 2016,
which positively impacted sales by $160
million.
These factors were partially offset by:
- a $155 million decrease in
reported U.S. dollar sales primarily as a result of the weakening
of the Canadian dollar against the U.S. dollar;
- lower production volumes on the Chevrolet Cruze as a result of
the changeover to and production ramp up of the next generation
model; and
- net customer price concessions subsequent to the first quarter
of 2015.
External Production Sales - Europe
Reported external production sales in Europe increased 20% or $371 million to $2.27
billion for the first quarter of 2016 compared to
$1.90 billion for the first quarter
of 2015, primarily as a result of:
- acquisitions during or subsequent to the first quarter of 2015,
which positively impacted sales by $360
million, including Getrag and Stadco Automotive Ltd.
("Stadco");
- the launch of new programs during or subsequent to the first
quarter of 2015, including the:
- Audi A4 and A4 Cabrio;
- BMW X1;
- Volkswagen Superb; and
- Volkswagen Caddy.
These factors were partially offset by:
- a $67 million decrease in
reported U.S. dollar sales primarily as a result of the weakening
of foreign currencies against the U.S. dollar, including the euro,
British pound, Turkish lira and Russian ruble;
- the sale of our battery pack business during the second quarter
of 2015;
- programs that ended production during or subsequent to the
first quarter of 2015; and
- net customer price concessions subsequent to the first quarter
of 2015.
External Production Sales - Asia
Reported external production sales in Asia increased 26% or $104 million to $507
million for the first quarter of 2016 compared to
$403 million for the first quarter of
2015, primarily as a result of:
- acquisitions during or subsequent to the first quarter of 2015,
including the partnership agreement in China ("the Xingqiaorui Partnership") with
Chongqing Xingqiaorui and the acquisition of Getrag, which
positively impacted sales by $69
million; and
- the launch of new programs during or subsequent to the first
quarter of 2015, primarily in China.
These factors were partially offset by:
- a $27 million decrease in
reported U.S. dollar sales primarily as a result of the weakening
of the Chinese renminbi against the U.S. dollar; and
- net customer price concessions subsequent to the first quarter
of 2015.
External Production Sales - Rest of World
Reported external production sales in Rest of World decreased
39% or $51 million to $80 million for the first quarter of 2016
compared to $131 million for the
first quarter of 2015, primarily as a result of a $35 million decrease in reported U.S. dollar
sales as a result of the weakening of foreign currencies against
the U.S. dollar, including the Brazilian real and Argentine
peso.
This factor decrease was partially offset by:
- higher production volumes on certain existing programs;
- the launch of new programs during or subsequent to the first
quarter of 2015, primarily in Brazil; and
- net customer price increases subsequent to the first quarter of
2015.
Complete Vehicle Assembly Sales
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For the three
months
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ended March
31,
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2016
|
2015
|
Change
|
|
|
|
|
Complete Vehicle
Assembly Sales
|
$
|
596
|
$
|
600
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- 1%
|
|
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Complete Vehicle
Assembly Volumes (Units)
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23,235
|
27,343
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- 15%
|
Reported complete vehicle assembly sales decreased $4 million, to $596
million for the first quarter of 2016 compared to
$600 million for the first quarter of
2015 while assembly volumes decreased 15% or 4,108 units.
The decrease in complete vehicle assembly sales is primarily as
a result of:
- a decrease in assembly volumes for the MINI Countryman and
Paceman, as these programs near the end of production;
- the end of production of the Peugeot RCZ at our Magna Steyr facility during the third quarter of
2015; and
- a $12 million decrease in
reported U.S. dollar sales as a result of the weakening of the euro
against the U.S. dollar.
These factors were partially offset by an increase in assembly
volumes for the Mercedes-Benz G-Class which has a higher average
selling price per vehicle compared to the MINI programs.
Tooling, Engineering and Other Sales
Reported tooling, engineering and other sales increased 33% or
$169 million to $687 million for the first quarter of 2016
compared to $518 million for the
first quarter of 2015.
In the first quarter of 2016, the major programs for which we
recorded tooling, engineering and other sales were the:
- Chevrolet Cruze;
- Chrysler Pacifica;
- Ford Figo Aspire;
- GMC Acadia, Buick Enclave and Chevrolet Traverse;
- Ford Escape;
- BMW X5;
- Chevrolet Equinox, Captivia and GMC Terrain;
- BMW 5-Series;
- Volkswagen Tiguan; and
- Opel Astra.
In the first quarter of 2015, the major programs for which we
recorded tooling, engineering and other sales were the:
- Ford F-Series;
- Skoda Fabia;
- Honda HR-V and Vezel;
- MINI Countryman;
- Land Rover Discovery Sport;
- Ford Edge;
- BMW 1-Series; and
- GMC Acadia, Buick Enclave and Chevrolet Traverse.
Acquisitions during or subsequent to the first quarter of 2015,
including Getrag, had a favourable impact on our reported tooling,
engineering and other sales, while the weakening of certain foreign
currencies against the U.S. dollar had an unfavourable impact of
$20 million on our reported tooling,
engineering and other sales.
Cost of Goods Sold and Gross Margin
|
For the three
months
|
|
ended March
31,
|
|
2016
|
2015
|
|
|
|
Sales
|
$
|
8,900
|
$
|
7,772
|
|
|
|
Cost of goods
sold
|
|
|
|
Material
|
5,578
|
4,888
|
|
Direct
labour
|
621
|
519
|
|
Overhead
|
1,420
|
1,261
|
|
7,619
|
6,668
|
Gross
margin
|
$
|
1,281
|
$
|
1,104
|
|
|
|
Gross margin as a
percentage of sales
|
14.4%
|
14.2%
|
Cost of goods sold increased $951
million to $7.62 billion for
the first quarter of 2016 compared to $6.67
billion for the first quarter of 2015 primarily as a result
of:
- higher material, overhead and labour costs associated with the
increase in sales;
- operational inefficiencies at certain facilities, in particular
at certain body and chassis operations in North America;
- lower recoveries associated with scrap steel;
- higher launch costs;
- higher warranty costs of $11
million;
- increased pre-operating costs incurred at new facilities;
and
- a greater amount of employee profit sharing.
These factors were partially offset by:
- a decrease in reported U.S. dollar cost of goods sold as a
result of the weakening of foreign currencies against the U.S.
dollar, including the Canadian dollar, the euro, Chinese renminbi,
British pound, Turkish lira, and Russian ruble;
- productivity and efficiency improvements at certain facilities;
and
- decreased commodity costs.
Gross margin increased $177
million to $1.28 billion for
the first quarter of 2016 compared to $1.10
billion for the first quarter of 2015 and gross margin as a
percentage of sales increased to 14.4% for the first quarter of
2016 compared to 14.2% for the first quarter of 2015. The increase
in gross margin as a percentage of sales was primarily due to:
- productivity and efficiency improvements at certain
facilities;
- a decrease in the proportion of complete vehicle assembly sales
relative to total sales, which have a higher material content than
our consolidated average; and
- decreased commodity costs.
These factors were partially offset by:
- operational inefficiencies at certain facilities, in particular
at certain body and chassis operations in North America;
- higher launch costs;
- lower recoveries associated with scrap steel;
- an increase in the proportion of tooling, engineering and other
sales relative to total sales, that have low or no margins;
- higher warranty costs; and
- increased pre-operating costs incurred at new facilities.
Depreciation and Amortization
Depreciation and amortization costs increased $52 million to $246 million for the first
quarter of 2016 compared to $194 million for the first quarter
of 2015. The higher depreciation and amortization was primarily as
a result of acquisitions during or subsequent to the first quarter
of 2015, including the acquisition of Getrag; the acquisition of
Stadco; and the Xingqiaorui Partnership, and increased capital
deployed at existing facilities partially offset by a decrease in
reported U.S. dollar depreciation and amortization largely as a
result of the weakening of certain foreign currencies against the
U.S. dollar.
Selling, General and Administrative
("SG&A")
SG&A expense as a percentage of sales was 4.4% for the first
quarter of 2016 compared to 4.2% for the first quarter of 2015.
SG&A expense increased $62
million to $392 million for
the first quarter of 2016 compared to $330
million for the first quarter of 2015 primarily as a result
of:
- net foreign exchange losses incurred in the first quarter of
2016 compared to net foreign exchange gains incurred in the first
quarter of 2015;
- acquisitions during or subsequent to the first quarter of
2015;
- higher labour and benefit costs;
- higher incentive and executive compensation;
- higher costs to support our global compliance programs;
and
- costs related to the investment in our information technology
infrastructure.
These factors were partially offset by:
- the weakening of the Canadian dollar against the U.S. dollar;
and
- a favourable intellectual property infringement settlement in
relation to our electronics business.
Equity Income
Equity income increased $4 million
to $55 million for the first quarter
of 2016 compared to $51 million for
the first quarter of 2015 primarily as a result of the acquisition
of Getrag in the first quarter of 2016.
Segment Analysis
Given the differences between the regions in which we operate,
our operations are segmented on a geographic basis. Consistent with
the above, our internal financial reporting separately segments key
internal operating performance measures between North America, Europe, Asia
and Rest of World for purposes of presentation to the chief
operating decision maker to assist in the assessment of operating
performance, the allocation of resources, and our long-term
strategic direction and future global growth.
Our chief operating decision maker uses Adjusted EBIT as the
measure of segment profit or loss, since we believe Adjusted EBIT
is the most appropriate measure of operational profitability or
loss for our reporting segments. Adjusted EBIT represents income
from operations before income taxes; interest expense, net; and
other expense, net. During the first quarter of 2016 and
2015, no other expense, net was recorded in any segment.
|
|
For the three
months ended March 31,
|
|
|
Total
Sales
|
|
Adjusted
EBIT
|
|
2016
|
2015
|
Change
|
|
2016
|
2015
|
Change
|
|
|
|
|
|
|
|
|
North
America
|
$
|
5,080
|
$
|
4,457
|
$
|
623
|
|
$
|
489
|
$
|
453
|
$
|
36
|
Europe
|
3,242
|
2,818
|
424
|
|
161
|
128
|
33
|
Asia
|
625
|
463
|
162
|
|
51
|
42
|
9
|
Rest of
World
|
81
|
133
|
(52)
|
|
(11)
|
(4)
|
(7)
|
Corporate and
Other
|
(128)
|
(99)
|
(29)
|
|
8
|
12
|
(4)
|
Total reportable
segments
|
$
|
8,900
|
$
|
7,772
|
$
|
1,128
|
|
$
|
698
|
$
|
631
|
$
|
67
|
North America
Adjusted EBIT in North America
increased $36 million to $489 million for the first quarter of 2016
compared to $453 million for the first quarter of 2015
primarily as a result of:
- margins earned on higher production sales;
- productivity and efficiency improvements at certain
facilities;
- a favourable intellectual property infringement settlement in
relation to our electronics business;
- the acquisition of Getrag during the first quarter of 2016;
and
- decreased commodity costs.
These factors were partially offset by:
- operational inefficiencies at certain facilities, in particular
at certain body and chassis operations;
- lower recoveries associated with scrap steel;
- a decrease in reported U.S. dollar Adjusted EBIT as a result of
the weakening of the Canadian dollar against the U.S. dollar;
- higher launch costs;
- higher incentive compensation;
- increased pre-operating costs incurred at new facilities;
- higher warranty costs of $3
million;
- higher affiliation fees paid to Corporate; and
- insurance recoveries received during the first quarter of 2015,
related to a fire at a body and chassis facility during the second
quarter of 2014.
Europe
Adjusted EBIT in Europe
increased $33 million to $161 million for the first quarter of 2016
compared to $128 million for the first quarter of 2015,
primarily as a result of:
- acquisitions during or subsequent to the first quarter of
2015;
- margins earned on higher production sales;
- productivity and efficiency improvements at certain
facilities;
- the sale of our battery pack business during the second quarter
of 2015; and
- decreased commodity costs.
These factors were partially offset by:
- operational inefficiencies at certain facilities;
- higher launch costs;
- a decrease in reported U.S. dollar Adjusted EBIT as a result of
the weakening of certain foreign currencies against the U.S.
dollar;
- higher warranty costs of $3
million; and
- a higher amount of employee profit sharing.
Asia
Adjusted EBIT in Asia increased
$9 million to $51 million for the first quarter of 2016
compared to $42 million for the first
quarter of 2015 primarily as a result of:
- acquisitions during or subsequent to the first quarter of
2015;
- margins earned on higher production sales; and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- operational inefficiencies at certain facilities;
- higher warranty costs of $5
million;
- higher launch costs; and
- increased pre-operating costs incurred at new facilities.
Rest of World
Adjusted EBIT in Rest of World decreased $7 million to a loss of $11 million for the first quarter of 2016
compared to a loss of $4 million for
the first quarter of 2015 primarily as a result of margins earned
on lower production sales.
This decrease was partially offset by:
- a decrease in reported U.S. dollar Adjusted EBIT loss due to
the weakening of the Brazilian real against the U.S. dollar;
and
- net customer price increases subsequent to the first quarter of
2015.
Corporate and Other
Corporate and Other Adjusted EBIT decreased $4 million to $8
million for the first quarter of 2016 compared to
$12 million for the first quarter of
2015 primarily as a result of higher costs to support our global
compliance programs partially offset by an increase in affiliation
fees earned from our divisions.
Interest Expense, net
During the first quarter of 2016, we recorded net interest
expense of $23 million compared to
$10 million for the first quarter of
2015. The $13 million increase is
primarily as a result of interest expense on the following
issuances of senior, unsecured debt (the "Senior Debt"):
- $650 million of 4.150% fixed-rate
senior notes issued during the third quarter of 2015;
- €550 million of 1.900% fixed-rate senior notes issued during
the fourth quarter of 2015; and
- Cdn$425 million of 3.100%
fixed-rate senior notes issued during the fourth quarter of
2015.
Income from Continuing Operations before Income
Taxes
Income from continuing operations before income taxes increased
$54 million to $675 million for the first quarter of 2016
compared to $621 million for 2015
primarily as a result of:
- margins earned on higher production sales;
- productivity and efficiency improvements at certain
facilities;
- acquisitions during or subsequent to the first quarter of
2015;
- a favourable intellectual property infringement settlement in
relation to our electronics business;
- decreased commodity costs; and
- the sale of our battery pack business during the second quarter
of 2015.
These factors were partially offset by:
- operational inefficiencies at certain facilities, in particular
at certain body and chassis operations in North America;
- higher launch costs;
- lower recoveries associated with scrap steel;
- a decrease in reported U.S. dollar Adjusted EBIT as a result of
the weakening of the Canadian dollar against the U.S. dollar;
- the $13 million increase in
interest expense, net, as discussed above;
- higher warranty costs of $11
million;
- higher incentive compensation;
- increased pre-operating costs incurred at new facilities;
- higher costs to support our global compliance programs;
and
- insurance recoveries received during the first quarter of 2015,
related to a fire at a body and chassis facility during the second
quarter of 2014.
Income Taxes
The effective income tax rate decreased to 25.5% for the first
quarter of 2016 compared to 26.9% for the first quarter of 2015
primarily as a result of favourable audit settlements related to
prior taxation years and the effect of an increase in equity income
partially offset by an increase in losses not benefitted primarily
in South America.
Income (Loss) from Continuing Operations Attributable to
Non-Controlling Interests
Income from continuing operations attributable to
non-controlling interests increased to $11
million for the first quarter of 2016 compared to a loss
from continuing operations attributable to non-controlling
interests of $1 million for the first
quarter of 2015. The income attributable to non-controlling
interests in 2016 was primarily a result of net income earned on
the acquisitions of Getrag and the Xingqiaorui Partnership, both of
which have a non-controlling interest.
Net Income Attributable to Magna International
Inc.
Net income attributable to Magna International Inc. of
$492 million for the first quarter of 2016 increased
$27 million compared to the first quarter of 2015 primarily as
a result of the increase in the income from operations before
income taxes partially offset by the increase in the income (loss)
from continuing operations attributable to non-controlling
interests, decrease in the income from discontinued operations, and
higher income taxes.
Earnings per Share
|
For the three
months
|
|
|
ended March
31,
|
|
|
2016
|
2015
|
Change
|
|
|
|
|
Basic earnings per
Common Share
|
|
|
|
|
Continuing
operations
|
$
|
1.23
|
$
|
1.11
|
+
|
11%
|
|
Attributable to Magna
International Inc.
|
$
|
1.23
|
$
|
1.14
|
+
|
8%
|
|
|
|
|
Diluted earnings per
Common Share
|
|
|
|
|
Continuing
operations
|
$
|
1.22
|
$
|
1.10
|
+
|
11%
|
|
Attributable to Magna
International Inc.
|
$
|
1.22
|
$
|
1.12
|
+
|
9%
|
|
|
|
|
Weighted average
number of Common Shares outstanding (millions)
|
|
|
|
|
Basic
|
400.4
|
409.3
|
-
|
2%
|
|
Diluted
|
403.2
|
415.0
|
-
|
3%
|
Diluted earnings per share from continuing operations increased
$0.12 to $1.22 for the first quarter of 2016 compared to
$1.10 for the first quarter of 2015
as a result of the increase in net income attributable to Magna
International Inc. from continuing operations and a decrease in the
weighted average number of diluted shares outstanding during the
first quarter of 2016.
The decrease in the weighted average number of diluted shares
outstanding was due to the purchase and cancellation of Common
Shares, during or subsequent to the first quarter of 2015, pursuant
to our normal course issuer bids.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash Flow from Operations
|
|
|
For the three
months
|
|
|
|
|
ended March
31,
|
|
|
|
|
2016
|
2015
|
Change
|
|
|
|
|
|
|
Net income from
continuing operations
|
|
|
$
|
503
|
$
|
454
|
|
Items not involving
current cash flows
|
|
|
264
|
175
|
|
|
|
|
767
|
629
|
$
|
138
|
Changes in operating
assets and liabilities
|
|
|
(469)
|
(349)
|
|
Cash provided from
operating activities
|
|
|
$
|
298
|
$
|
280
|
$
|
18
|
Cash flow from operations before changes in operating assets and
liabilities increased $138 million to
$767 million for the first quarter of
2016 compared to $629 million for the
first quarter of 2015. The increase in cash flow from operations
was due to a $89 million increase in
items not involving current cash flows and a $49 million increase in net income from
continuing operations. Items not involving current cash flows are
comprised of the following:
|
|
|
For the three
months
|
|
|
|
ended March
31,
|
|
|
|
2016
|
2015
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
$
|
246
|
$
|
194
|
Amortization of other
assets included in cost of goods sold
|
|
|
33
|
23
|
Other non-cash
charges
|
|
|
14
|
3
|
Deferred income
taxes
|
|
|
4
|
(27)
|
Equity income in
excess of dividends received
|
|
|
(33)
|
(18)
|
Items not involving
current cash
flows
|
|
|
$
|
264
|
$
|
175
|
Cash invested in operating assets and liabilities amounted to
$469 million for the first quarter of
2016 compared to $349 million for the
first quarter of 2015. The change in operating assets and
liabilities is comprised of the following sources (and uses) of
cash:
|
|
|
|
|
|
|
For the three
months
|
|
|
|
|
|
|
|
ended March
31,
|
|
|
|
|
|
|
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
|
|
|
|
$
|
(697)
|
$
|
(477)
|
Inventories
|
|
|
|
|
|
|
(125)
|
(126)
|
Prepaid expenses and
other
|
|
|
|
|
|
|
18
|
(14)
|
Accounts
payable
|
|
|
|
|
|
|
195
|
114
|
Accrued salaries and
wages
|
|
|
|
|
|
|
111
|
64
|
Other accrued
liabilities
|
|
|
|
|
|
|
(19)
|
38
|
Income taxes
receivable/payable
|
|
|
|
|
|
|
48
|
52
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
$
|
(469)
|
$
|
(349)
|
The increase in accounts receivable and accounts payable and
accrued salaries and wages in the first quarter of 2016 was
primarily due to an increase in production activities at the end of
the first quarter of 2016 compared to the end of 2015. The increase
in inventories was primarily due to increased tooling inventory to
support upcoming launches and higher production inventory due to
the increase in production activities at the end of the first
quarter of 2016 compared to the end of 2015.
Capital and Investment Spending
|
For the three
months
|
|
|
ended March
31,
|
|
|
2016
|
2015
|
Change
|
|
|
|
|
Fixed asset
additions
|
$
|
(346)
|
$
|
(266)
|
|
Investments and other
assets
|
(54)
|
(37)
|
|
Fixed asset,
investment and other asset additions
|
(400)
|
(303)
|
|
Business
combinations
|
(1,782)
|
(1)
|
|
Proceeds from
disposition
|
18
|
24
|
|
Cash used in
discontinued operations
|
—
|
(32)
|
|
Cash used for
investment activities
|
$
|
(2,164)
|
$
|
(312)
|
$
|
(1,852)
|
Fixed asset, investment and other asset additions
In the first quarter of 2016, we invested $346 million in
fixed assets. While investments were made to refurbish or replace
assets consumed in the normal course of business and for
productivity improvements, a large portion of the investment in the
first quarter of 2016 was for manufacturing equipment for programs
that will be launching subsequent to the first quarter of 2016.
In the first quarter of 2016, we invested $50 million in other assets related primarily to
fully reimbursable tooling and engineering costs for programs that
launched during the first quarter of 2016 or will be launching
subsequent to the first quarter of 2016. In addition, we invested
$4 million in equity accounted
investments.
Business combinations
In January 2016, we acquired 100%
of the common shares and voting interests of Getrag, a global
supplier of automotive transmission systems including manual,
automated-manual, dual clutch, hybrid and other advanced systems
for cash consideration of $1.78
billion.
Proceeds from disposition
In the first quarter of 2016, the $18
million of proceeds include normal course fixed and other
asset disposals.
Financing
|
|
|
|
For the three
months
|
|
|
|
|
|
ended March
31,
|
|
|
|
|
|
2016
|
2015
|
Change
|
|
|
|
|
|
|
|
Issues of
debt
|
|
|
|
$
|
59
|
$
|
15
|
|
(Decrease) increase
in short-term borrowings
|
|
|
|
(48)
|
69
|
|
Repayments of
debt
|
|
|
|
(27)
|
(43)
|
|
Issues of Common
Shares
|
|
|
|
23
|
6
|
|
Repurchase of Common
Shares
|
|
|
|
(300)
|
—
|
|
Dividends
paid
|
|
|
|
(95)
|
(89)
|
|
Cash used for
financing activities
|
|
|
|
$
|
(388)
|
$
|
(42)
|
$
|
(346)
|
The decrease in short-term borrowings primarily relates to the
repayment of bank debt acquired as part of the acquisition of
Getrag, partially offset by the establishment of a euro-commercial
paper program [the "Program"] in the first quarter of 2016.
During the first quarter of 2016, we purchased 7.3 million
Common Shares for aggregate cash consideration of $300 million under our normal course issuer
bid.
Cash dividends paid per Common Share were $0.25 for the first quarter of 2016, for a total
of $95 million.
Financing Resources
|
|
|
|
|
As
at
March
31,
2016
|
As at
December
31,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
|
|
|
$
|
388
|
$
|
25
|
|
|
Long-term debt due
within one year
|
|
|
|
|
273
|
211
|
|
|
Long-term
debt
|
|
|
|
|
2,500
|
2,327
|
|
|
|
|
|
|
3,161
|
2,563
|
|
Non-controlling
interest
|
|
|
|
|
469
|
151
|
|
Shareholders'
equity
|
|
|
|
|
9,455
|
8,966
|
|
Total
capitalization
|
|
|
|
|
$
|
13,085
|
$
|
11,680
|
$
|
1,405
|
Total capitalization increased by $1.41
billion to $13.09 billion at
March 31, 2016 compared to
$11.68 billion at
December 31, 2015, primarily as a result of a
$598 million increase in liabilities,
a $489 million increase in
shareholders' equity and a $318
million increase in non-controlling interest.
The increase in liabilities relates primarily to:
- the establishment of the Program in the first quarter of 2016
of which $228 million of Commercial
Paper was outstanding as of March 31,
2016; and
- higher bank indebtedness and long-term debt primarily as a
result of the acquisition of Getrag in the first quarter of
2016.
The increase in shareholders' equity was primarily as a result
of:
- the $503 million of net income
earned in the first quarter of 2016;
- the $256 million net unrealized
gain on translation of our net investment in operations whose
functional currency is not the U.S. dollar; and
- the $69 million net unrealized
gain on cash flow hedges.
These factors were partially offset by:
- the $300 million repurchase and
cancellation of 7.3 million Common Shares under our normal course
issuer bid during 2015; and
- $95 million of dividends paid
during the first quarter of 2016.
The increase in non-controlling interest was primarily as a
result of acquisitions during or subsequent to the first quarter of
2015.
Cash Resources
During the first quarter of 2016, our cash resources decreased
by $2.24 billion to $625 million as a result of the cash used for
investing and financing activities partially offset by cash
provided from operating activities, as discussed above. In addition
to our cash resources at March 31,
2016, we had term and operating lines of credit totalling
$2.66 billion of which $1.93 billion was unused and available.
Maximum Number of Shares Issuable
The following table presents the maximum number of shares that
would be outstanding if all of the outstanding options at
May 4, 2016 were exercised:
Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
396,696,162
|
Stock options
(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
7,898,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
404,594,568
|
(i)
|
Options to purchase
Common Shares are exercisable by the holder in accordance with the
vesting provisions and upon payment of the exercise price as may be
determined from time to time pursuant to our stock option
plans.
|
Contractual Obligations and Off‑Balance Sheet
Financing
There have been no material changes with respect to the
contractual obligations requiring annual payments during the first
quarter of 2016 that are outside the ordinary course of our
business. Refer to our MD&A included in our 2015 Annual
Report.
SUBSEQUENT EVENT
Credit Facility Increase and Extension
On May 2, 2016, the Company
increased its revolving credit facility by $500 million to $2.75 billion and extended the
final maturity date from June 22,
2020 to June 22,
2021. The facility includes a $200 million Asian tranche, a $100 million Mexican tranche and a tranche for
Canada, U.S. and Europe, which is fully transferable between
jurisdictions and can be drawn in U.S. dollars, Canadian dollars or
euros.
COMMITMENTS AND CONTINGENCIES
From time to time, we may be contingently liable for litigation,
legal and/or regulatory actions and proceedings and other
claims.
Refer to note 15 of our unaudited interim consolidated financial
statements for the three months ended March
31, 2016, which describes these claims.
For a discussion of risk factors relating to legal and other
claims/actions against us, refer to "Item 3. Description of the
Business – Risk Factors" in our Annual Information Form and Annual
Report on Form 40-F, each in respect of the year ended December 31, 2015.
CONTROLS AND PROCEDURES
There have been no changes in our internal controls over
financial reporting that occurred during the three months ended
March 31, 2016 that have materially
affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
FORWARD‑LOOKING STATEMENTS
The previous discussion contains statements that constitute
"forward-looking information" or "forward-looking statements"
within the meaning of applicable securities legislation, including,
but not limited to, statements relating to the expected growth of
the Dual Clutch Transmission ("DCT") product segment. The
forward-looking statements or forward-looking information in this
press release is presented for the purpose of providing information
about management's current expectations and plans and such
information may not be appropriate for other purposes.
Forward-looking statements or forward-looking information may
include financial and other projections, as well as statements
regarding our future plans, objectives or economic performance, or
the assumptions underlying any of the foregoing, and other
statements that are not recitations of historical fact. We use
words such as "may", "would", "could", "should", "will", "likely",
"expect", "anticipate", "believe", "intend", "plan", "forecast",
"outlook", "project", "estimate" and similar expressions suggesting
future outcomes or events to identify forward-looking statements or
forward-looking information. Any such forward-looking statements or
forward-looking information are based on information currently
available to us, and are based on assumptions and analyses made by
us in light of our experience and our perception of historical
trends, current conditions and expected future developments, as
well as other factors we believe are appropriate in the
circumstances. However, whether actual results and developments
will conform with our expectations and predictions is subject to a
number of risks, assumptions and uncertainties, many of which are
beyond our control, and the effects of which can be difficult to
predict, including, without limitation: the potential for a
deterioration of economic conditions or an extended period of
economic uncertainty; declines in consumer confidence and the
impact on production volume levels; fluctuations in relative
currency values; continuing global or regional economic
uncertainty; restructuring, downsizing and/or other significant
non-recurring costs; underperformance of one or more of our
operating divisions; ongoing pricing pressures, including our
ability to offset price concessions demanded by our customers; our
ability to successfully launch material new or takeover business;
our ability to successfully identify, complete and integrate
acquisitions or achieve anticipated synergies; our ability to
conduct appropriate due diligence on acquisition targets; an
increase in our risk profile as a result of completed
acquisitions; shifts in market share away from our top customers;
shifts in market shares among vehicles or vehicle segments, or
shifts away from vehicles on which we have significant content;
inability to sustain or grow our business; risks of conducting
business in foreign markets, including China, India,
Eastern Europe, Brazil and other non-traditional markets for
us; a prolonged disruption in the supply of components to us from
our suppliers; work stoppages and labour relations disputes;
scheduled shutdowns of our customers' production facilities
(typically in the third and fourth quarters of each calendar year);
our ability to successfully compete with other automotive
suppliers; a reduction in outsourcing by our customers or the loss
of a material production or assembly program; the termination or
non-renewal by our customers of any material production purchase
order; our ability to consistently develop innovative products or
processes; exposure to, and ability to offset, volatile commodities
prices; warranty and recall costs; restructuring actions by OEMs,
including plant closures; shutdown of our or our customers' or
sub-suppliers' production facilities due to a labour disruption;
risk of production disruptions due to natural disasters or
catastrophic event; the security and reliability of our information
technology systems; pension liabilities; legal claims and/or
regulatory actions against us; changes in our mix of earnings
between jurisdictions with lower tax rates and those with higher
tax rates, as well as our ability to fully benefit tax losses;
impairment charges related to goodwill, long-lived assets and
deferred tax assets; other potential tax exposures; changes in
credit ratings assigned to us; changes in laws and governmental
regulations; costs associated with compliance with environmental
laws and regulations; liquidity risks; inability to achieve future
investment returns that equal or exceed past returns; the
unpredictability of, and fluctuation in, the trading price of our
Common Shares; and other factors set out in our Annual Information
Form filed with securities commissions in Canada and our annual report on Form 40-F
filed with the United States Securities and Exchange Commission,
and subsequent filings. In evaluating forward-looking statements or
forward-looking information, we caution readers not to place undue
reliance on any forward-looking statements or forward-looking
information, and readers should specifically consider the various
factors which could cause actual events or results to differ
materially from those indicated by such forward-looking statements
or forward-looking information. Unless otherwise required by
applicable securities laws, we do not intend, nor do we undertake
any obligation, to update or revise any forward-looking statements
or forward-looking information to reflect subsequent information,
events, results or circumstances or otherwise.
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF
INCOME
[Unaudited]
[U.S. dollars in millions,
except per share figures]
|
|
|
Three months
ended
|
|
|
|
March
31,
|
|
Note
|
|
2016
|
2015
|
|
|
|
|
|
Sales
|
|
|
$
|
8,900
|
$
|
7,772
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
Cost of goods
sold
|
|
|
7,619
|
6,668
|
|
Depreciation and
amortization
|
|
|
246
|
194
|
|
Selling, general and
administrative
|
|
|
392
|
330
|
|
Interest expense,
net
|
|
|
23
|
10
|
|
Equity
income
|
|
|
(55)
|
(51)
|
Income from
continuing operations before income taxes
|
|
|
675
|
621
|
Income
taxes
|
|
|
172
|
167
|
Net income from
continuing operations
|
|
|
503
|
454
|
Income from
discontinued operations, net of tax
|
2
|
|
—
|
10
|
Net
income
|
|
|
503
|
464
|
(Income) loss from
continuing operations attributable to
|
|
|
|
|
|
non-controlling
interest
|
|
|
(11)
|
1
|
Net income
attributable to Magna International Inc.
|
|
|
$
|
492
|
$
|
465
|
|
|
|
|
|
Basic earnings per
share:
|
3
|
|
|
|
|
Continuing
operations
|
|
|
$
|
1.23
|
$
|
1.11
|
|
Discontinued
operations
|
|
|
—
|
0.03
|
|
Attributable to Magna
International Inc.
|
|
|
$
|
1.23
|
$
|
1.14
|
|
|
|
|
|
Diluted earnings per
share:
|
3
|
|
|
|
|
Continuing
operations
|
|
|
$
|
1.22
|
$
|
1.10
|
|
Discontinued
operations
|
|
|
—
|
0.02
|
|
Attributable to Magna
International Inc.
|
|
|
$
|
1.22
|
$
|
1.12
|
|
|
|
|
|
Cash dividends paid
per Common Share
|
|
|
$
|
0.25
|
$
|
0.22
|
|
|
|
|
|
Weighted average
number of Common Shares outstanding
|
|
|
|
|
|
during the period [in
millions]:
|
3
|
|
|
|
|
Basic
|
|
|
400.4
|
409.3
|
|
Diluted
|
|
|
403.2
|
415.0
|
See accompanying notes
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
[Unaudited]
[U.S.
dollars in millions]
|
|
|
Three months
ended
|
|
|
|
March
31,
|
|
Note
|
|
2016
|
2015
|
|
|
|
|
|
Net
income
|
|
|
$
|
503
|
$
|
464
|
|
|
|
|
|
Other comprehensive
income (loss), net of
tax:
|
13
|
|
|
|
|
Net unrealized income
(loss) on translation of net investment in foreign
operations
|
|
|
261
|
(438)
|
|
Net unrealized gain
on available-for-sale investments
|
|
|
—
|
1
|
|
Net unrealized gain
(loss) on cash flow hedges
|
|
|
69
|
(65)
|
|
Reclassification of
net loss on cash flow hedges to net income
|
|
|
36
|
11
|
|
Reclassification of
net loss on pensions to net income
|
|
|
1
|
1
|
|
Pension and post
retirement benefits
|
|
|
(2)
|
(1)
|
Other
comprehensive income
(loss)
|
|
|
365
|
(491)
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
|
868
|
(27)
|
Comprehensive
(income) loss attributable to non-controlling
interests
|
|
|
(16)
|
1
|
Comprehensive
income (loss) attributable to
|
|
|
|
|
|
Magna
International Inc.
|
|
|
$
|
852
|
$
|
(26)
|
See accompanying notes
MAGNA INTERNATIONAL INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
[Unaudited]
[U.S.
dollars in millions]
|
|
Three months
ended
|
|
|
March
31,
|
|
Note
|
2016
|
2015
|
|
|
|
|
Cash provided from
(used for):
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
Net income from
continuing operations
|
|
$
|
503
|
$
|
454
|
Items not involving
current cash flows
|
4
|
264
|
175
|
|
|
767
|
629
|
Changes in operating
assets and liabilities
|
4
|
(469)
|
(349)
|
Cash provided from
operating activities
|
|
298
|
280
|
|
|
|
|
INVESTMENT
ACTIVITIES
|
|
|
|
Fixed asset
additions
|
|
(346)
|
(266)
|
Purchase of
subsidiaries
|
5
|
(1,782)
|
(1)
|
Increase in
investments and other assets
|
|
(54)
|
(37)
|
Proceeds from
disposition
|
|
18
|
24
|
Cash used in
discontinued operations
|
|
—
|
(32)
|
Cash used for
investing activities
|
|
(2,164)
|
(312)
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
Issues of
debt
|
|
59
|
15
|
(Decrease) increase
in short-term
borrowings
|
|
(48)
|
69
|
Repayments of
debt
|
|
(27)
|
(43)
|
Issues of Common
Shares on exercise of stock
options
|
|
23
|
6
|
Repurchase of Common
Shares
|
12
|
(300)
|
—
|
Dividends
|
|
(95)
|
(89)
|
Cash used for
financing activities
|
|
(388)
|
(42)
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
16
|
(76)
|
|
|
|
|
Net decrease in cash
and cash equivalents during the period
|
|
(2,238)
|
(150)
|
Cash and cash
equivalents, beginning of period
|
|
2,863
|
1,249
|
Cash and cash
equivalents, end of period
|
|
$
|
625
|
$
|
1,099
|
See accompanying notes
MAGNA INTERNATIONAL INC.
CONSOLIDATED
BALANCE SHEETS
[Unaudited]
[U.S. dollars in
millions]
|
|
|
As
at
|
As
at
|
|
|
|
March
31,
|
December
31,
|
|
Note
|
|
2016
|
2015
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
4
|
|
$
|
625
|
$
|
2,863
|
Accounts
receivable
|
|
|
6,546
|
5,439
|
Inventories
|
6
|
|
2,864
|
2,564
|
Prepaid expenses and
other
|
9
|
|
403
|
278
|
|
|
|
10,438
|
11,144
|
|
|
|
|
|
Investments
|
5, 14
|
|
2,226
|
399
|
Fixed assets,
net
|
|
|
6,745
|
6,005
|
Goodwill
|
5, 7
|
|
1,831
|
1,344
|
Deferred tax
assets
|
|
|
296
|
271
|
Other
assets
|
8
|
|
844
|
524
|
|
|
|
$
|
22,380
|
$
|
19,687
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Short-term
borrowings
|
9
|
|
$
|
388
|
$
|
25
|
Accounts
payable
|
|
|
5,221
|
4,746
|
Accrued salaries and
wages
|
|
|
817
|
660
|
Other accrued
liabilities
|
10
|
|
1,858
|
1,512
|
Income taxes
payable
|
|
|
179
|
122
|
Long‑term debt due
within one
year
|
|
|
273
|
211
|
|
|
|
8,736
|
7,276
|
|
|
|
|
|
Long‑term
debt
|
|
|
2,500
|
2,327
|
Long-term employee
benefit
liabilities
|
|
|
653
|
504
|
Other long‑term
liabilities
|
|
|
269
|
331
|
Deferred tax
liabilities
|
|
|
298
|
132
|
|
|
|
12,456
|
10,570
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
Capital
stock
|
|
|
|
|
|
Common
Shares
|
|
|
|
|
|
[issued:
396,678,447; December 31, 2015 – 402,264,201]
|
12
|
|
3,911
|
3,942
|
Contributed
surplus
|
|
|
101
|
107
|
Retained
earnings
|
|
|
6,547
|
6,387
|
Accumulated other
comprehensive loss
|
13
|
|
(1,104)
|
(1,470)
|
|
|
|
9,455
|
8,966
|
|
|
|
|
|
Non-controlling
interests
|
|
|
469
|
151
|
|
|
|
9,924
|
9,117
|
|
|
|
$
|
22,380
|
$
|
19,687
|
See accompanying notes
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY
[Unaudited]
[U.S. dollars in
millions]
|
|
|
|
|
|
|
|
|
|
Common
Shares
|
|
|
|
|
|
|
Note
|
Number
|
Stated
Value
|
Contri-
buted
Surplus
|
Retained
Earnings
|
AOCL
(i)
|
Non-
controlling
Interest
|
Total
Equity
|
|
|
[in
millions]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2015
|
|
402.3
|
$
|
3,942
|
$
|
107
|
$
|
6,387
|
$
|
(1,470)
|
$
|
151
|
$
|
9,117
|
Net income
|
|
|
|
|
492
|
|
11
|
503
|
Other comprehensive
income
|
|
|
|
|
|
360
|
5
|
365
|
Shares issued on
exercise of
|
|
|
|
|
|
|
|
|
|
stock
options
|
|
1.7
|
32
|
(9)
|
|
|
|
23
|
Release of stock and
stock units
|
|
|
7
|
(7)
|
|
|
|
—
|
Repurchase and
cancellation under
|
|
|
|
|
|
|
|
|
|
normal course issuer
bid
|
12
|
(7.3)
|
(71)
|
|
(236)
|
7
|
|
(300)
|
Stock-based
compensation expense
|
|
|
|
10
|
|
|
|
10
|
Contributions by
non-controlling
|
|
|
|
|
|
|
|
|
|
interest
|
|
|
|
|
|
|
(1)
|
(1)
|
Acquisition
|
5
|
|
|
|
|
(1)
|
303
|
302
|
Dividends
paid
|
|
|
1
|
|
(96)
|
|
|
(95)
|
Balance, March 31,
2016
|
|
396.7
|
$
|
3,911
|
$
|
101
|
$
|
6,547
|
$
|
(1,104)
|
$
|
469
|
$
|
9,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
Number
|
Stated
Value
|
Contri-
buted
Surplus
|
Retained
Earnings
|
AOCL
(i)
|
Non-controlling
Interest
|
Total
Equity
|
|
|
[in
millions]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2014
|
|
410.3
|
$
|
3,979
|
$
|
83
|
$
|
5,155
|
$
|
(558)
|
$
|
14
|
$
|
8,673
|
Net income
|
|
|
|
|
465
|
|
(1)
|
464
|
Other comprehensive
loss
|
|
|
|
|
|
(491)
|
|
(491)
|
Shares issued on
exercise of
|
|
|
|
|
|
|
|
|
|
stock
options
|
|
0.3
|
8
|
(2)
|
|
|
|
6
|
Release of stock and
stock units
|
|
|
5
|
(5)
|
|
|
|
—
|
Stock-based
compensation
|
|
|
|
|
|
|
|
|
|
expense
|
|
|
|
10
|
|
|
|
10
|
Dividends
paid
|
|
|
3
|
|
(92)
|
|
|
(89)
|
Balance, March 31,
2015
|
|
410.6
|
$
|
3,995
|
$
|
86
|
$
|
5,528
|
$
|
(1,049)
|
$
|
13
|
$
|
8,573
|
|
(i) AOCL is Accumulated Other
Comprehensive Loss.
|
See accompanying notes
MAGNA INTERNATIONAL INC.
NOTES TO INTERIM
CONSOLIDATED FINANCIAL
STATEMENTS
[Unaudited]
[All amounts in U.S.
dollars and all tabular amounts in millions unless otherwise
noted]
1. SIGNIFICANT ACCOUNTING
POLICIES
[a] Basis of presentation
The unaudited interim consolidated financial statements of Magna
International Inc. and its subsidiaries [collectively "Magna" or
the "Company"] have been prepared in U.S. dollars following
accounting principles generally accepted in the United States of America ["GAAP"].
The unaudited interim consolidated financial statements do not
conform in all respects to the requirements of GAAP for annual
financial statements. Accordingly, these unaudited
interim consolidated financial statements should be read in
conjunction with the December 31,
2015 audited consolidated financial statements and notes
thereto included in the Company's 2015 Annual Report.
The unaudited interim consolidated financial statements reflect
all adjustments, which consist only of normal and recurring
adjustments, necessary to present fairly the financial position at
March 31, 2016 and the results of
operations, changes in equity and cash flows for the three-months
ended March 31, 2016 and 2015.
[b] Accounting Changes
Simplifying the Presentation of Debt Issuance Costs
In the first quarter of 2016, the Company adopted Accounting
Standards Update No. 2015-03 "Interest – Imputation of Interest
(Subtopic 835-30): Simplifying the Presentation of Debt Issuance
Costs". This guidance requires that debt issuance costs be
presented as a direct reduction to the carrying amount of the
related debt in the balance sheet rather than as an asset.
Consequently, the Company has reclassified $19 million of deferred debt issuance costs from
other assets to long-term debt in the consolidated balance sheet as
at December 31, 2015.
[c] Future Accounting Standards
Revenue Recognition
In May 2014, the FASB issued ASU
No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU
2014-09), to supersede nearly all existing revenue recognition
guidance under GAAP. The core principle of ASU 2014-09 is to
recognize revenues when promised goods or services are transferred
to customers in an amount that reflects the consideration that is
expected to be received for those goods or services. ASU 2014-09 is
effective for the Company in the first quarter of fiscal 2017 using
either of two methods: [i] retrospective to each prior reporting
period presented with the option to elect certain practical
expedients as defined within ASU 2014-09; or [ii] retrospective
with the cumulative effect of initially applying ASU 2014-09
recognized at the date of initial application and providing certain
additional disclosures as defined per ASU 2014-09. The Company is
currently evaluating the impact of its pending adoption of ASU
2014-09 on its consolidated financial statements.
Leases
In February 2016, the FASB issued
ASU No. 2016-02, "Leases: Topic 842 (ASU 2016-02)", to supersede
nearly all existing lease guidance under GAAP. The guidance would
require lessees to recognize most leases on their balance sheets as
lease liabilities with corresponding right-of-use assets. ASU
2016-02 is effective for the Company in the first quarter of fiscal
2019 using a modified retrospective approach with the option to
elect certain practical expedients. The Company is currently
evaluating the impact of its pending adoption of ASU 2016-02 on its
consolidated financial statements.
[d] Seasonality
The Company's businesses are generally not seasonal. However,
the Company's sales and profits are closely related to its
automotive customers' vehicle production schedules. The Company's
largest North American customers typically halt production for
approximately two weeks in July and one week in December.
Additionally, many of the Company's customers in Europe typically shutdown vehicle production
during portions of August and one week in December.
2. DISCONTINUED OPERATIONS
At June 30, 2015, the Company
determined that its interiors operations met the criteria to be
classified as discontinued operations, which required retrospective
application to financial information for all periods presented.
Refer to the Company's 2015 Annual Report for additional
information on the Company's Discontinued Operations.
There were no amounts related to the interiors operations
classified as discontinued operations for the three month period
ended March 31, 2016. The following
table summarizes the results of the interiors operations classified
as discontinued operations for the three month period ended
March 31, 2015:
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
$
|
589
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
|
|
|
|
546
|
|
Depreciation and
amortization
|
|
|
|
|
|
11
|
|
Selling, general and
administrative
|
|
|
|
|
|
25
|
|
Equity
income
|
|
|
|
|
|
(4)
|
|
Income from
discontinued operations before income taxes
|
|
|
|
|
|
11
|
|
Income
taxes
|
|
|
|
|
|
1
|
Income from
discontinued operations, net of
tax
|
|
|
|
|
|
$
|
10
|
3. EARNINGS PER SHARE
Earnings per share are computed as follows:
|
|
|
Three months
ended
|
|
|
|
March
31,
|
|
|
|
|
2016
|
2015
|
|
|
|
|
|
|
|
Income available
to Common shareholders:
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
|
|
$
|
503
|
$
|
454
|
|
(Loss) income from
continuing operations attributable to
|
|
|
|
|
|
non-controlling
interest
|
|
|
(11)
|
1
|
|
Net income
attributable to Magna International Inc. from
|
|
|
|
|
|
controlling
operations
|
|
|
492
|
455
|
|
Income from
discontinued operations, net of tax
|
|
|
—
|
10
|
Net income
attributable to Magna International Inc.
|
|
|
$
|
492
|
$
|
465
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
400.4
|
409.3
|
|
Adjustments
|
|
|
|
|
|
Stock options and
restricted stock [a]
|
|
|
2.8
|
5.7
|
|
Diluted
|
|
|
403.2
|
415.0
|
|
|
[a]
|
For the three
months ended March 31, 2016, diluted earnings per Common Share
excludes 3.8 million [2015 – 0.5 million] Common Shares issuable
under the Company's Incentive Stock Option Plan because these
options were not "in-the-money".
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
|
|
|
|
|
|
|
$
|
1.23
|
$
|
1.11
|
|
Discontinued
operations
|
|
|
|
|
|
|
|
|
|
—
|
0.03
|
|
Attributable to Magna
International Inc.
|
|
|
|
|
|
|
|
|
|
$
|
1.23
|
$
|
1.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
|
|
|
|
|
|
|
$
|
1.22
|
$
|
1.10
|
|
Discontinued
operations
|
|
|
|
|
|
|
|
|
|
—
|
0.02
|
|
Attributable to Magna
International Inc.
|
|
|
|
|
|
|
|
|
|
$
|
1.22
|
$
|
1.12
|
4. DETAILS OF CASH FROM
OPERATING ACTIVITIES
[a] Cash and cash equivalents:
|
|
March
31,
2016
|
December
31,
2015
|
|
|
|
|
Bank term deposits,
bankers' acceptances and government paper
|
|
$
|
328
|
$
|
2,572
|
Cash
|
|
297
|
291
|
|
|
$
|
625
|
$
|
2,863
|
[b] Items not involving current cash
flows:
|
|
|
|
Three months
ended
March 31,
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
$
|
246
|
$
|
194
|
Amortization of other
assets included in cost of goods sold
|
|
|
|
|
33
|
|
23
|
Other non-cash
charges
|
|
|
|
|
14
|
|
3
|
Deferred income
taxes
|
|
|
|
|
4
|
|
(27)
|
Equity income in
excess of dividends
received
|
|
|
|
|
(33)
|
|
(18)
|
|
|
|
|
$
|
264
|
$
|
175
|
[c] Changes in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Three months
ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
|
|
|
|
|
|
|
$
|
(697)
|
$
|
(477)
|
Inventories
|
|
|
|
|
|
|
|
|
|
(125)
|
(126)
|
Prepaid expenses and
other
|
|
|
|
|
|
|
|
|
|
18
|
(14)
|
Accounts
payable
|
|
|
|
|
|
|
|
|
|
195
|
114
|
Accrued salaries and
wages
|
|
|
|
|
|
|
|
|
|
111
|
64
|
Other accrued
liabilities
|
|
|
|
|
|
|
|
|
|
(19)
|
38
|
Income taxes
payable
|
|
|
|
|
|
|
|
|
|
48
|
52
|
|
|
|
|
|
|
|
|
|
|
$
|
(469)
|
$
|
(349)
|
5. ACQUISITION
On January 4, 2016, the Company
completed the acquisition of 100% of the common shares and voting
interests of the Getrag Group of Companies ["Getrag"]. Getrag
is a global supplier of automotive transmission systems, including
manual, automated-manual, dual clutch, hybrid and other advanced
systems. The purchase price was $1.8
billion [net of $136 million
cash acquired], and is subject to working capital and other
customary purchase price adjustments. The acquired business
has sales primarily to BMW, Audi, Jiangling Motors, Ford, Volvo and
Dongfeng.
The acquisition of Getrag was accounted for as a business
combination. The following table summarizes the provisional
amounts recognized for assets acquired and liabilities assumed at
their estimated fair
values:
|
|
|
|
|
|
Preliminary
amounts recognized
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
$
|
136
|
Non-cash working
capital
|
|
|
|
|
|
|
|
|
|
(466)
|
Investments
|
|
|
|
|
|
|
|
|
|
1,719
|
Fixed
assets
|
|
|
|
|
|
|
|
|
|
468
|
Goodwill
|
|
|
|
|
|
|
|
|
|
430
|
Other
assets
|
|
|
|
|
|
|
|
|
|
60
|
Intangibles
|
|
|
|
|
|
|
|
|
|
218
|
Deferred tax
assets
|
|
|
|
|
|
|
|
|
|
43
|
Long-term employee
benefit liabilities
|
|
|
|
|
|
|
|
|
|
(125)
|
Long-term
debt
|
|
|
|
|
|
|
|
|
|
(116)
|
Other long-term
liabilities
|
|
|
|
|
|
|
|
|
|
(9)
|
Deferred tax
liabilities
|
|
|
|
|
|
|
|
|
|
(137)
|
Non-controlling
interest
|
|
|
|
|
|
|
|
|
|
(303)
|
Consideration
paid
|
|
|
|
|
|
|
|
|
|
1,918
|
Less: Cash
acquired
|
|
|
|
|
|
|
|
|
|
(136)
|
Net cash
outflow
|
|
|
|
|
|
|
|
|
|
$
|
1,782
|
The preliminary purchase price allocation is subject to change
and may be subsequently adjusted to reflect final valuation results
and other adjustments.
The investments amount includes the following equity investments
that were acquired as part of the business
combination:
|
|
Ownership
|
|
Preliminary
|
|
|
Percentage
|
|
Investment
Balance
|
|
|
|
|
|
|
Getrag Ford
Transmission GmbH
|
|
50.0%
|
|
$
|
434
|
Getrag (Jiangxi)
Transmission Co., Ltd ["GJT"]
(i)
|
|
50.0%
|
|
$
|
1,122
|
Dongfeng Getrag
Transmission Co. Ltd
|
|
50.0%
|
|
$
|
163
|
(i)
|
GJT is 66.7% owned
by one of the Company's consolidated subsidiaries
which has a 25% non-controlling interest. As a result, the
preliminary investment balance was derived using 66.7% of the fair
value.
|
The Company will account for the investments under the equity
method since it has the ability to exercise significant influence
but does not hold a controlling financial interest.
Recognized goodwill is attributable to the assembled workforce,
expected synergies and other intangible assets that do not qualify
for separate recognition. Substantially all of the goodwill
recognized was assigned to the Company's European segment and is
not deductible for tax purposes.
Intangible assets consist primarily of amounts recognized for
the fair value of customer contracts and patents. These
amortizable intangible assets are being amortized on a straight
line basis over their estimated useful lives.
Sales and net income for the acquired Getrag entities for the
three months ended March 31, 2016
were $501 million and $8 million, respectively.
Pro forma
If the acquisition of Getrag occurred on January 1, 2015, the Company's unaudited pro
forma consolidated sales for the three months ended March 31, 2015 would have been $8.3 billion and the unaudited pro forma
consolidated net income would have been $463
million. The unaudited pro forma financial results do
not include any anticipated synergies or other expected benefits of
the acquisition. This information is presented for
informational purposes only and is not indicative of future
operating results.
6. INVENTORIES
Inventories consist
of:
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials and
supplies
|
|
|
|
|
|
|
|
|
|
|
|
$
|
984
|
|
$
|
843
|
Work-in-process
|
|
|
|
|
|
|
|
|
|
|
|
|
284
|
|
|
246
|
Finished
goods
|
|
|
|
|
|
|
|
|
|
|
|
|
336
|
|
|
311
|
Tooling and
engineering
|
|
|
|
|
|
|
|
|
|
|
|
|
1,260
|
|
|
1,164
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,864
|
|
$
|
2,564
|
Tooling and engineering inventory represents costs incurred on
tooling and engineering services contracts in excess of billed and
unbilled amounts included in accounts receivable.
7. GOODWILL
The following is a continuity of the Company's goodwill:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December
31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,344
|
Acquisition [note
5]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
430
|
Foreign exchange and
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
|
Balance at March 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,831
|
8. OTHER ASSETS
Other assets consist
of:
|
March
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Preproduction costs
related to long-term supply agreements with
|
|
|
|
|
|
|
contractual guarantee
for reimbursement
|
$
|
315
|
|
$
|
276
|
Customer relationship
intangibles
|
|
300
|
|
|
75
|
Long-term
receivables
|
|
91
|
|
|
87
|
Patents and licences,
net
|
|
54
|
|
|
37
|
Unrealized gain on
cash flow hedges
|
|
24
|
|
|
5
|
Pension overfunded
status
|
|
17
|
|
|
17
|
Other,
net
|
|
43
|
|
|
27
|
|
$
|
844
|
|
$
|
524
|
9. SHORT-TERM
BORROWINGS
The Company's short-term borrowings consist of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
indebtedness
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
160
|
|
$
|
25
|
Commercial
paper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
228
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
388
|
|
$
|
25
|
In connection with the acquisition, the Company acquired a
revolving credit facility that is drawn in euros. The Company
is required to secure any amounts outstanding under the loan with a
U.S. dollar cash deposit of 110% of the outstanding loan amount. As
at March 31, 2016, a balance of
$114 million was outstanding under
the revolving credit facility. The Prepaid expenses and other
balance includes a cash deposit of $125
million which is restricted under the terms of the
loan.
In the first quarter of 2016, the Company established a
euro-commercial paper program [the "Program"]. Under the Program,
the Company may issue euro-commercial paper notes [the "notes"] up
to a maximum aggregate amount of €500 million or its equivalent in
alternative currencies. Any notes issued will be guaranteed by the
Company. The proceeds from the issuance of any notes will be used
for general corporate purposes. As of March 31, 2016, $228
million of Commercial Paper was outstanding, with a
weighted-average interest rate of 0.02%, and maturities generally
less than three months.
10. WARRANTY
The following is a continuity of the Company's warranty
accruals:
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period
|
|
|
|
|
|
|
|
|
|
|
|
$
|
59
|
|
$
|
80
|
Expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
8
|
Settlements
|
|
|
|
|
|
|
|
|
|
|
|
|
(17)
|
|
|
(10)
|
Acquisition [note
5]
|
|
|
|
|
|
|
|
|
|
|
|
|
172
|
|
|
—
|
Foreign exchange and
other
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
(6)
|
Balance, March
31
|
|
|
|
|
|
|
|
|
|
|
|
$
|
237
|
|
$
|
72
|
The warranty obligation assumed as a result of the acquisition
was recognized at its estimated fair value of $172 million. Of this amount, $127 million relates to a pre-acquisition
settlement agreement negotiated with a customer and a supplier for
a specific performance issue.
11. LONG-TERM EMPLOYEE BENEFIT
LIABILITIES
The Company recorded long-term employee benefit expenses as
follows:
|
|
|
|
|
|
|
|
Three months
ended
March 31,
|
|
|
|
|
|
|
|
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
|
Defined benefit
pension plans and other
|
|
|
|
|
|
|
|
$
|
4
|
$
|
4
|
Termination and
long-term service arrangements
|
|
|
|
|
|
|
|
8
|
7
|
|
|
|
|
|
|
|
|
$
|
12
|
$
|
11
|
12. CAPITAL STOCK
[a] During the first quarter of 2016, the
Company repurchased 7,277,425 shares under a normal course issuer
bid for cash consideration of $300
million.
[b] The following table presents the maximum
number of shares that would be outstanding if all the dilutive
instruments outstanding at May 4,
2016 were exercised or converted:
Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
396,696,162
|
Stock options
(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,898,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
404,594,568
|
(i) Options to purchase Common Shares are
exercisable by the holder in accordance with the vesting provisions
and upon payment of the exercise price as may be determined from
time to time pursuant to the Company's stock option plans.
13. ACCUMULATED OTHER COMPREHENSIVE LOSS
The following is a continuity schedule of accumulated other
comprehensive loss:
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
Accumulated net
unrealized loss gain on translation of net investment in
foreign
|
|
|
|
|
|
operations
|
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
(1,042)
|
|
$
|
(255)
|
|
Net unrealized gain
(loss)
|
|
256
|
|
|
(438)
|
|
Repurchase of shares
under normal course issuer bid
|
|
7
|
|
|
—
|
|
Balance, March
31
|
|
(779)
|
|
|
(693)
|
|
|
|
|
|
|
Accumulated net
unrealized loss on cash flow hedges (i)
|
|
|
|
|
|
|
Balance, beginning of
period
|
|
(262)
|
|
|
(113)
|
|
Net unrealized gain
(loss)
|
|
69
|
|
|
(65)
|
|
Reclassification of
net loss to net income
|
|
36
|
|
|
11
|
|
Balance, March
31
|
|
(157)
|
|
|
(167)
|
|
|
|
|
|
|
Accumulated net
unrealized loss on available-for-sale investments
|
|
|
|
|
|
|
Balance, beginning of
period
|
|
(1)
|
|
|
(4)
|
|
Net unrealized
loss
|
|
—
|
|
|
1
|
|
Balance, March
31
|
|
(1)
|
|
|
(3)
|
|
|
|
|
|
|
Accumulated net
unrealized loss on pensions (ii)
|
|
|
|
|
|
|
Balance, beginning of
period
|
|
(165)
|
|
|
(186)
|
|
Net unrealized
loss
|
|
(2)
|
|
|
(1)
|
|
Acquisition [note
5]
|
|
(1)
|
|
|
—
|
|
Reclassification of
net loss to net income
|
|
1
|
|
|
1
|
|
Balance, March
31
|
|
(167)
|
|
|
(186)
|
Total accumulated
other comprehensive
loss
|
$
|
(1,104)
|
|
$
|
(1,049)
|
(i) The amount of income tax
benefit that has been netted in the accumulated net unrealized loss
on cash flow hedges is as follows:
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning
of period
|
|
|
|
|
|
|
$
|
97
|
|
$
|
44
|
Net unrealized
loss
|
|
|
|
|
|
|
|
(24)
|
|
|
27
|
Reclassification
of net loss to net income
|
|
|
|
|
|
|
|
(14)
|
|
|
(5)
|
Balance, March
31
|
|
|
|
|
|
|
$
|
59
|
|
$
|
66
|
(ii) The amount of income tax
benefit that has been netted in the accumulated net unrealized loss
on pensions is as follows:
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning
of period
|
|
|
|
|
|
|
|
|
|
$
|
31
|
|
$
|
36
|
Net unrealized
loss
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
|
—
|
Balance, March
31
|
|
|
|
|
|
|
|
|
|
$
|
29
|
|
$
|
36
|
The amount of other comprehensive loss that is expected to be
reclassified to net income over the next 12 months is $145 million.
14. FINANCIAL INSTRUMENTS
[a] The Company's financial assets and
financial liabilities consist of the following:
|
|
March
31,
|
|
December
31
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
Trading
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
625
|
|
$
|
2,863
|
|
Investment in
asset-backed commercial paper
|
|
|
78
|
|
|
73
|
|
Equity
investments
|
|
|
6
|
|
|
4
|
|
|
$
|
709
|
|
$
|
2,940
|
|
|
|
|
|
|
|
Held to maturity
investments
|
|
|
|
|
|
|
|
Severance
investments
|
|
$
|
3
|
|
$
|
3
|
|
|
|
|
|
|
|
Loans and
receivables
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
$
|
6,546
|
|
$
|
5,439
|
|
Long-term receivables
included in other assets
|
|
|
91
|
|
|
87
|
|
|
$
|
6,637
|
|
$
|
5,526
|
|
|
|
|
|
|
|
Other financial
liabilities
|
|
|
|
|
|
|
|
Bank
indebtedness
|
|
$
|
160
|
|
$
|
25
|
|
Commercial
paper
|
|
|
228
|
|
|
—
|
|
Long-term debt
(including portion due within one year)
|
|
|
2,773
|
|
|
2,557
|
|
Accounts
payable
|
|
|
5,221
|
|
|
4,746
|
|
|
$
|
8,382
|
|
$
|
7,328
|
|
|
|
|
|
|
|
Derivatives
designated as effective hedges, measured at
|
|
|
|
|
|
|
|
fair value Foreign
currency contracts
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
$
|
24
|
|
$
|
27
|
|
|
Other
assets
|
|
|
24
|
|
|
4
|
|
|
Other accrued
liabilities
|
|
|
(157)
|
|
|
(191)
|
|
|
Other long-term
liabilities
|
|
|
(79)
|
|
|
(152)
|
|
|
$
|
(188)
|
|
$
|
(312)
|
[b] Derivatives designated as effective hedges,
measured at fair value
The Company presents derivatives that are designated as
effective hedges at gross fair values in the consolidated balance
sheets. However, master netting and other similar arrangements
allow net settlements under certain conditions. The following table
shows the Company's derivative foreign currency contracts at gross
fair value as reflected in the consolidated balance sheets and the
unrecognized impacts of master netting arrangements:
|
|
|
|
|
|
Gross
amounts
presented
in consolidated
balance sheets
|
|
Gross
amounts
not offset
in consolidated
balance sheets
|
|
Net
amounts
|
March 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
$
|
48
|
|
$
|
45
|
|
$
|
3
|
|
Liabilities
|
|
|
|
|
|
$
|
(236)
|
|
$
|
(45)
|
|
$
|
(191)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
$
|
31
|
|
$
|
30
|
|
$
|
1
|
|
Liabilities
|
|
|
|
|
|
$
|
(343)
|
|
$
|
(30)
|
|
$
|
(313)
|
[c] Fair value
The Company determined the estimated fair values of its
financial instruments based on valuation methodologies it believes
are appropriate; however, considerable judgment is required to
develop these estimates. Accordingly, these estimated fair values
are not necessarily indicative of the amounts the Company could
realize in a current market exchange. The estimated fair value
amounts can be materially affected by the use of different
assumptions or methodologies. The methods and assumptions used to
estimate the fair value of financial instruments are described
below:
Cash and cash equivalents, accounts receivable, short-term
borrowings and accounts payable.
Due to the short period to maturity of the instruments, the
carrying values as presented in the consolidated balance sheets are
reasonable estimates of fair values.
Investments
At March 31, 2016, the Company
held Canadian third party asset-backed commercial paper ["ABCP"]
with a face value of Cdn$107 million
[December 31, 2015 - Cdn$107
million]. The carrying value and estimated fair value of this
investment was Cdn$102 million
[December 31, 2015 - Cdn$101
million]. As fair value information is not readily determinable for
the Company's investment in ABCP, the fair value was based on a
valuation technique estimating the fair value from the perspective
of a market participant.
Term debt
The Company's term debt includes $273
million due within one year. Due to the short period to
maturity of this debt, the carrying value as presented in the
consolidated balance sheets is a reasonable estimate of its fair
value.
Senior Notes
The fair value of our senior notes are classified as Level 1
when we use quoted prices in active markets and Level 2 when the
quoted prices are from less active markets or when other observable
inputs are used to determine fair value. At March 31, 2016, the net book value of the
Company's Senior Notes was $2.35
billion and the estimated fair value was $2.43 billion, determined primarily using active
market prices.
[d] Credit risk
The Company's financial assets that are exposed to credit risk
consist primarily of cash and cash equivalents, accounts
receivable, held to maturity investments, and foreign exchange
forward contracts with positive fair values.
Cash and cash equivalents, which consists of short-term
investments, are only invested in governments, bank term deposits
and bank commercial paper with an investment grade credit rating.
Credit risk is further reduced by limiting the amount which is
invested in certain governments or any major financial
institution.
The Company is also exposed to credit risk from the potential
default by any of its counterparties on its foreign exchange
forward contracts. The Company mitigates this credit risk by
dealing with counterparties who are major financial institutions
that the Company anticipates will satisfy their obligations under
the contracts.
In the normal course of business, the Company is exposed to
credit risk from its customers, substantially all of which are in
the automotive industry and are subject to credit risks associated
with the automotive industry. For the three month period ended
March 31, 2016, sales to the
Company's six largest customers represented 83% of the Company's
total sales, respectively, and substantially all of the Company's
sales are to customers in which it has ongoing contractual
relationships.
[e] Interest rate risk
The Company is not exposed to significant interest rate risk due
to the short-term maturity of its monetary current assets and
current liabilities. In particular, the amount of interest income
earned on the Company's cash and cash equivalents is impacted more
by the investment decisions made and the demands to have available
cash on hand, than by movements in the interest rates over a given
period.
In addition, the Company is not exposed to interest rate risk on
its term debt and Senior Notes as the interest rates on these
instruments are fixed.
[f] Currency risk and foreign exchange
contracts
The Company is exposed to fluctuations in foreign exchange rates
when manufacturing facilities have committed to the delivery of
products for which the selling price has been quoted in currencies
other than the facilities' functional currency, and when materials
and equipment are purchased in currencies other than the
facilities' functional currency. In an effort to manage this net
foreign exchange exposure, the Company employs hedging programs,
primarily through the use of foreign exchange forward contracts
At March 31, 2016, the Company had
outstanding foreign exchange forward contracts representing
commitments to buy and sell various foreign currencies. Significant
commitments are as follows:
|
|
|
Buys
|
|
|
Sells
|
For Canadian
dollars
|
|
|
|
|
|
|
|
U.S.
amount
|
|
|
222
|
|
|
2,219
|
|
euro
amount
|
|
|
46
|
|
|
6
|
|
Korean won
amount
|
|
|
28,700
|
|
|
—
|
|
|
|
|
|
|
|
For U.S.
dollars
|
|
|
|
|
|
|
|
Peso
amount
|
|
|
12,752
|
|
|
70
|
|
Korean won
amount
|
|
|
25,823
|
|
|
—
|
|
|
|
|
|
|
|
For euros
|
|
|
|
|
|
|
|
U.S.
amount
|
|
|
170
|
|
|
267
|
|
GBP amount
|
|
|
4
|
|
|
30
|
|
Czech Koruna
amount
|
|
|
6,164
|
|
|
2
|
|
Polish Zlotys
amount
|
|
|
327
|
|
|
13
|
Forward contracts mature at various dates through 2019.
Foreign currency exposures are reviewed quarterly.
15. CONTINGENCIES
From time to time, the Company may become involved in regulatory
proceedings, or become liable for legal, contractual and other
claims by various parties, including customers, suppliers, former
employees, class action plaintiffs and others. On an ongoing basis,
the Company attempts to assess the likelihood of any adverse
judgments or outcomes to these proceedings or claims, together with
potential ranges of probable costs and losses. A determination of
the provision required, if any, for these contingencies is made
after analysis of each individual issue. The required provision may
change in the future due to new developments in each matter or
changes in approach such as a change in settlement strategy in
dealing with these matters.
[a] In November
1997, the Company and two of its subsidiaries were sued by
KS Centoco Ltd., an Ontario-based
steering wheel manufacturer in which the Company has a 23% equity
interest, and by Centoco Holdings Limited, the owner of the
remaining 77% equity interest in KS Centoco Ltd. In March 1999, the plaintiffs were granted leave to
make substantial amendments to the original statement of claim in
order to add several new defendants and claim additional remedies
and, in February 2006, the plaintiffs
further amended their claim to add an additional remedy. In
February 2016, a consent order was
granted allowing the Plaintiffs to file a fresh statement of claim
which includes an additional remedy and reduces certain aggravated
and punitive damages claimed. The fresh statement of claim
alleges, among other things:
- breach of fiduciary duty by the Company and two of its
subsidiaries;
- breach by the Company of its binding letter of intent with KS
Centoco Ltd., including its covenant not to have any interest,
directly or indirectly, in any entity that carries on the airbag
business in North America, other
than through MST Automotive Inc., a company to be 77% owned by
Magna and 23% owned by Centoco Holdings Limited;
- the plaintiff's exclusive entitlement to certain airbag
technologies in North America
pursuant to an exclusive licence agreement [the "Licence
Agreement"], together with an accounting of all revenues and
profits resulting from the alleged use by the Company, TRW Inc.
["TRW"] and other unrelated third party automotive supplier
defendants of such technology in North
America;
- inducement by the Company of a breach of the Licence Agreement
by TRW;
- a conspiracy by the Company, TRW and others to deprive KS
Centoco Ltd. of the benefits of such airbag technology in
North America and to cause Centoco
Holdings Limited to sell to TRW its interest in KS Centoco Ltd. in
conjunction with the Company's sale to TRW of its interest in MST
Automotive GmbH and TEMIC Bayern-Chemie Airbag GmbH; and
- oppression by the defendants
The plaintiffs are seeking, amongst other things, damages of
approximately Cdn$2.56 billion.
Document production, completion of undertakings and examinations
for discovery are substantially complete, although limited
additional examinations for discovery are expected to occur. A
trial is not expected to commence until 2017. The Company believes
it has valid defences to the plaintiffs' claims and therefore
intends to continue to vigorously defend this case. Notwithstanding
the amount of time which has transpired since the claim was filed,
these legal proceedings remain at an early stage and, accordingly,
it is not possible to predict their outcome.
[b] In September
2014, the Conselho Administrativo de Defesa Economica,
Brazil's Federal competition
authority, attended at one of the Company's operating divisions in
Brazil to obtain information in
connection with an ongoing antitrust investigation relating to
suppliers of automotive door latches and related
products.
Proceedings of this nature can often continue for several years.
Where wrongful conduct is found, the relevant antitrust authority
can, depending on the jurisdiction, initiate administrative or
criminal legal proceedings and impose administrative or criminal
fines or penalties taking into account several mitigating and
aggravating factors. At this time, management is unable to
predict the duration or outcome of the Brazilian investigation,
including whether any operating divisions of the Company will be
found liable for any violation of law or the extent or magnitude of
any liability, if found to be liable.
The Company's policy is to comply with all applicable laws,
including antitrust and competition laws. The Company has initiated
a global review focused on antitrust risk led by a team of external
counsel. If any antitrust violation is found as a result of the
above-referenced investigations or otherwise, Magna could be
subject to fines, penalties and civil, administrative or criminal
legal proceedings that could have a material adverse effect on
Magna's profitability in the year in which any such fine or penalty
is imposed or the outcome of any such proceeding is determined.
Additionally, Magna could be subject to other consequences,
including reputational damage, which could have a material adverse
effect on the Company.
[c] In certain circumstances, the Company is
at risk for warranty costs including product liability and recall
costs. Due to the nature of the costs, the Company makes its best
estimate of the expected future costs [note 10]; however,
the ultimate amount of such costs could be materially different.
The Company continues to experience increased customer pressure to
assume greater warranty responsibility. Currently, under most
customer agreements, the Company only accounts for existing or
probable claims. Under certain complete vehicle engineering and
assembly contracts, and with respect to our transmission systems
programs, the Company records an estimate of future
warranty-related costs based on the terms of the specific customer
agreements, and the specific customer's (or our) warranty
experience.
16. SEGMENTED INFORMATION
The Company's chief operating decision maker uses Adjusted EBIT
as the measure of segment profit or loss, since management believes
Adjusted EBIT is the most appropriate measure of operational
profitability or loss for its reporting segments. Adjusted EBIT
represents income from operations before income taxes; interest
expense, net; and other expense, net.
The following tables show segment information for the Company's
reporting segments and a reconciliation of Adjusted EBIT to the
Company's consolidated income from operations before income
taxes:
|
Three months
ended
March 31,
2016
|
|
Three months
ended
March 31,
2015
|
|
Total
sales
|
External
sales
|
Adjusted
EBIT
|
Fixed
assets,
net
|
|
Total
sales
|
External
sales
|
Adjusted
EBIT
|
Fixed
assets,
net
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
|
|
|
|
|
|
|
|
|
Canada
|
$
|
1,634
|
$
|
1,509
|
|
$
|
694
|
|
$
|
1,464
|
$
|
1,360
|
|
$
|
610
|
|
United
States
|
2,484
|
2,376
|
|
1,456
|
|
2,259
|
2,154
|
|
1,221
|
|
Mexico
|
1,281
|
1,171
|
|
836
|
|
1,001
|
917
|
|
643
|
|
Eliminations
|
(319)
|
—
|
|
—
|
|
(267)
|
—
|
|
—
|
|
5,080
|
5,056
|
$
|
489
|
2,986
|
|
4,457
|
4,431
|
$
|
453
|
2,474
|
Europe
|
|
|
|
|
|
|
|
|
|
|
Western
Europe
|
|
|
|
|
|
|
|
|
|
|
|
(excluding Great
Britain)
|
2,600
|
2,512
|
|
1,814
|
|
2,253
|
2,190
|
|
1,166
|
|
Great
Britain
|
193
|
192
|
|
138
|
|
93
|
93
|
|
40
|
|
Eastern
Europe
|
540
|
474
|
|
528
|
|
550
|
489
|
|
450
|
|
Eliminations
|
(91)
|
—
|
|
—
|
|
(78)
|
—
|
|
—
|
|
3,242
|
3,178
|
161
|
2,480
|
|
2,818
|
2,772
|
128
|
1,656
|
Asia
|
625
|
584
|
51
|
803
|
|
463
|
436
|
42
|
662
|
Rest of
World
|
81
|
81
|
(11)
|
61
|
|
133
|
133
|
(4)
|
67
|
Corporate and
Other
|
(128)
|
1
|
8
|
415
|
|
(99)
|
—
|
12
|
358
|
Total reportable
segments
|
8,900
|
8,900
|
698
|
6,745
|
|
7,772
|
7,772
|
631
|
5,217
|
Interest expense,
net
|
|
|
(23)
|
|
|
|
|
(10)
|
|
|
$
|
8,900
|
$
|
8,900
|
$
|
675
|
6,745
|
|
$
|
7,772
|
$
|
7,772
|
$
|
621
|
5,217
|
Current
assets
|
|
|
|
10,438
|
|
|
|
|
10,187
|
Investments,
goodwill,
|
|
|
|
|
|
|
|
|
|
|
deferred tax assets
and other assets
|
|
|
|
5,197
|
|
|
|
|
2,281
|
Noncurrent assets
held for sale
|
|
|
|
—
|
|
|
|
|
336
|
Consolidated total
assets
|
|
|
|
$
|
22,380
|
|
|
|
|
$
|
18,021
|
17. SUBSEQUENT EVENT
Credit Facility Increase and Extension
On May 2, 2016, the Company
increased its revolving credit facility by $500 million to $2.75 billion and extended the
final maturity date from June 22,
2020 to June 22,
2021. The facility includes a $200 million Asian tranche, a $100 million Mexican tranche and a tranche for
Canada, U.S. and Europe, which is fully transferable between
jurisdictions and can be drawn in U.S. dollars, Canadian dollars or
euros.
SOURCE Magna International Inc.